Game of Thrones, True Detective, The Leftovers and ... Sesame Street?

Time Warner's (NYSE:TWX) premium cable network has signed an unusual deal, one that will bring the long-running, iconic children's show to its cable channel and streaming services -- and puts it into more direct competition with Netflix (NASDAQ:NFLX).

HBO sets its sights on a new market
Sesame Workshop, the company behind Sesame Street, will ramp up its production from 18 to 35 episodes per year and create a spin-off series. Those shows will eventually make their way to PBS -- Sesame Street's home since its inception -- but only after appearing exclusively on HBO and its digital services (HBO Go and HBO Now) for nine months.

HBO syndicates films that could be considered children's programming (as I write this, Night at the Museum, Rio 2, Scooby-Doo, and Stuart Little are available to stream from HBO Go), but does not currently offer any original shows aimed at younger viewers. Its flagship programs, such as Game of Thrones, are aimed almost exclusively at mature audiences.

This wasn't always the case. In the 1980s and 1990s, HBO carried several kids shows, including The Adventures of Tintin, The Little Lulu Show, and Crashbox. Reruns of some of these programs continue to run on the HBO Family channel, but production ceased roughly 15 years ago as the network shifted its focus to adult viewers.

Netflix has exclusive rights to many children's shows
In contrast, Netflix's original content push has emphasized children heavily, and it has much more to offer younger viewers than HBO.

Netflix's flagship programs -- such as House of Cards and Orange is the New Black -- are obviously aimed at adult viewers. However, it has more than half a dozen original series targeted exclusively at children, including Turbo FAST, The Adventures of Puss in Boots, and VeggieTales in the House. Netflix also carries many kids shows from other networks, including Scooby-Doo and Courage the Cowardly Dog. The addition of Disney's content, slated to roll out over the next three years, should bolster Netflix's catalog even more.

A new direction for HBO?
When it comes to families with young children, Netflix is clearly the more attractive service. There were likely several factors in play -- its lower price, its over-the-top distribution -- but Netflix's wider target audience may have played a key role in helping its total domestic subscriber base overtake HBO's in 2013.

In a note released back in April, analysts at UBS forecast that HBO's subscriber base will rise over the next five years, but remain below Netflix's. Ultimately, UBS concluded that HBO's singular focus and its adult brand would limit its appeal. The Sesame Street deal obviously changes that, and it could represent a pivotal moment in the future of the network.

Of course, it's only one program, but it makes HBO and its stand-alone digital service HBO Now more enticing to children and their parents. Will it be enough to slow Netflix's growth? Likely not. But if Time Warner's network signs additional deals and begins to invest in children's programming more heavily, it could eventually become a better Netflix alternative. It's certainly something that Netflix investors should watch closely.

Sam Mattera has no position in any stocks mentioned. The Motley Fool both recommends and owns shares of Netflix and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.